Posts Tagged ‘Corporate fraud’

It is a sad irony that what took 22 years to be made, crumbled in a span of 2 weeks. Satyam,one of the biggest IT players in India, would never be one again, not at least in its current form. The fear that is stalking every one’s mind is it an ill omen of more blood bath on corporate street, more skeletons tumbling out, more biggies taking a bow. If B Ramalinga Raju, the recipient of the Dataquest IT Man of the Year Award 2000, E&Y Entrepreneur of the Year Services award 1999, the Asia Business Leader Award 2002, and the Golden Peacock Award for Corporate Governance, cannot be trusted, who can be?

But let’s clear one thing, though Raju cheated the investors, clients, etc. he is certainly not a corporate thug out to make billions. Unlike Kenneth Lay from Enron, or Bernie Madoff, Raju claims to have been a personal fortune from the whole fiasco. The accounts being fudged at Satyam, were because of accounting indiscretion, what he referred as, “The gap in the balance sheet has arisen purely on account of inflated profits over a period of last several years (limited only to Satyam standalone, books of subsidiaries reflecting true performance). What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of the company operations grew significantly (annualized revenue run rate of Rs 11,276 crore in the September quarter, 2008 and official reserves of Rs 8.392 crore).”

So, while might be very fashionable to compare the whole Satyam saga to WorldComm and Enron, it is important to distinguish between the two. The only time that Raju speaks his heart in the letter to the Board is when he says that the whole fraud exercise was akin to “riding a tiger, not knowing how to get off without being eaten.”

If that is indeed the case, then lets punish him for his follies, but lets not start a witch-hunt and demonize him. Even the mighty err, so could have Raju. The only thing that upsets me, is why didn’t Raju own up to the thing earlier, even as the things were going down he was reassuring everyone that all was good. If only he would have owned up then, B Ramalinga Raju would not have been such a maligned name, neither would have Satyam become a synonm for corporate fraud and treachery.